On April 15, 2020, the Texas Department of Insurance (TDI) issued a bulletin encouraging insurers to conduct midterm premium audits of commercial policies where premiums may need to be adjusted as a result of reduced business operations due to the impact of the COVID-19 pandemic. TDI has advised it expects insurers to work with insureds whose commercial insurance premiums are measured based on auditable exposures, such as sales or payroll.
TDI encourages specific audit practices for insurers related to commercial policyholders with variable premiums likely impacted by the COVID 19 outbreak:
- Conduct midterm premium audits, if requested by policyholders, noting that many audits do not require on-site review;
- Allow policyholders to self-audit their own policies and report changes in the auditable exposure used to calculate their premiums;
- Consider any reduced risks for businesses that change operations or elected to continue to pay employees when they are not working; and
- Make other adjustments to reduce the premium as appropriate.
Midterm audits do not replace final audits permitted or required under the subject policies.
A copy of the TDI Commissioners’ Bulletin #B-0020-20 is found at https://www.tdi.texas.gov/bulletins/2020/B-0020-20.html.
